Van Rompuy trims spending plans for 2014-20 by €75bn

Herman Van Rompuy, the president of the European Council, has proposed reductions in the European Union’s multi-annual spending plan for 2014-20 that go beyond those proposed by Cyprus in previous versions – around €75 billion compared with €50bn proposed by Cyprus.

His proposal comes closer to demands made by the EU’s net contributors, a group of member states that includes Germany, the Netherlands, Sweden and the United Kingdom, that the Commission’s proposal should be reduced by at least €100bn and as much as €150bn. The European Commission’s proposal for a multiannual financial framework (MFF) was €1,033bn, an increase of 5% on 2007-13.

Interpretation of the headline figures will vary, however. In addition to the €75bn reduction proposed by Van Rompuy, both his and the Cypriot versions of the MFF contain €30bn of spending on items that were not included in the Commission’s proposal, which classified them as outside the EU budget: €20bn on big-ticket items – the EU’s Galileo satellite navigation programme (€6.65bn in Van Rompuy’s proposal), the experimental nuclear fusion reactor, Iter (€2.71bn), and GMES, the EU’s satellite programme (€4.94bn) – and another €10bn for the cost of Croatia joining the EU, which is supposed to happen next July.

Member states’ ambassadors will discuss Van Rompuy’s version of the multiannual financial framework (MFF) in Brussels today (15 November). That version is the first produced by Van Rompuy’s office, on the basis of bilateral consultations conducted last week (5-9 November) with all 27 member states plus Croatia. On Monday (19 November), Van Rompuy will brief ministers for European or foreign affairs on his draft, and the ministers will meet for a General Affairs Council on Tuesday to prepare the summit, which is entirely devoted to the MFF.

High-level negotiations

Previous versions of the MFF had been drafted by Cyprus, the current holder of the rotating presidency of the EU’s Council of Ministers. But as the MFF negotiations are shifting from the technical and ministerial level (where proceedings are chaired by Cyprus) to the level of heads of state or government, the preparations have now passed to Van Rompuy’s office. For the first time, the MFF proposal is now presented in the form of draft European Council conclusions.

On Tuesday (13 November), the leaders of 15 net recipient countries that style themselves ‘friends of cohesion policy’ met in Brussels to underscore their determination that the EU’s cohesion funding should not be cut more than other budget headings.

Fact File

The numbers game

In his draft for the multi-annual financial framework for 2014-20 published yesterday (14 November), Herman Van Rompuy, the president of the European Council, proposed cuts of €75 billion to the European Commission’s proposal of €1,033bn in spending. Cyprus, which had produced previous drafts, had proposed reductions of €50bn.

Van Rompuy proposed €15bn less for cohesion policy, bringing it to €309bn, and €14.5bn less for agricultural policy, down to €364.47bn. This includes a reduction of €7.15bn in rural development (bringing it to €83.67bn). At the same time, the latest proposal raises the cap on cohesion funding from 2.36% of a country’s gross national product to 2.4%.

Van Rompuy’s version also restores certain funding lines that had been cut by Cyprus, holder of the rotating presidency of the Council of Ministers, in its draft MFF. The Connecting Europe facility, which provides investments for infrastructure projects, has been raised to €46.25bn, €10bn more than in the Cyprus proposal. This includes €10bn in financing from the EU’s cohesion fund, a contribution which Cyprus had proposed to cut to €7bn.

Sweden’s rebate would drop by €25 million to €325m, while the German rebate would rise by €300m to €2.8bn and the Dutch rebate by €100m to €1.15bn. The UK’s rebate would remain untouched, although its financing would be more evenly spread among all member states.

The latest draft MFF also contains a list of specific savings in administrative spending, including a 40-hour working week for EU staff, the continuation of a solidarity levy on staff salaries, a later retirement age, of 65, and restrictions on early retirement.

The European Development Fund, which is technically outside the EU budget but whose size is set as part of the MFF negotiations, faces a €3bn cut from the €30bn proposed by the Commission (Cyprus’s draft contained no overall figure for the EDF).

The group was hosted by Martin Schulz, president of the European Parliament and led by Donald Tusk and Pedro Passos Coelho, the prime ministers of Poland and Portugal. The other members are Bulgaria, Cyprus, the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Romania, Slovakia, Slovenia and Spain, plus Croatia.

Schulz said after the meeting that the Parliament was “united behind the cohesion policy”.

In a swipe at the net contributors, he said: “To cut the European budget might be popular in some of the member states but it is absolutely counterproductive for the necessary re-launch of growth and the creation of jobs in Europe.”

Tusk said: “We are in favour of a balanced approach to potential cuts in the budget – such cuts should be applied in a balanced manner throughout all European policies.”